Thursday, September 29, 2016
Road of Life Events
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DETOUR: Loss of a Loved One
Losing a loved one is a huge emotional burden and can also be a tremendous financial
burden on surviving family members. The loss of someone you love affects all types
of insurance policies, but the most important type is life insurance if the deceased
is covered by a policy. Aside from life insurance, you should make sure that the
deceased's remaining insurance policies are properly disposed of.Does the deceased's
auto or health insurance policy cover any family members? If so, those family members
will have to obtain a policy on their own or they may be able to continue the coverage
but drop the deceased. Contact the insurance companies for detailed information
on each policy.
If the deceased has a life insurance policy(s), you should obtain the policy(s)
itself and look for a few critical pieces of information such as a policy number,
beneficiary(s), coverage amount and contact number for the insurance company or
agent. The beneficiary(s) should contact the insurance company or agent and make
them aware of the death so that they can send a claims form. The form asks basic
questions such as the cause, place and date of death. When filing a claim, the insurance
company will also require an original copy of the death certificate.
Once the claim has been filed and approved, the
insurance company will give the beneficiary(s) a number of settlement options
(if the policyowner has not already selected one) which may include:
Before selecting an option, the beneficiary should give careful consideration to
their current and future financial needs. Once all of the paperwork for the claim
has been submitted and the death benefit option is selected, the benefit should
be distributed within one to two weeks.
- Lump Sum Payment - The death proceeds of a life insurance policy are paid
to the beneficiary(s) in one lump sum payment.
- Fixed Period Payments - The death proceeds of a life insurance policy are
paid to the beneficiary(s) for a fixed period.
- Life Income with Installments Certain - The death proceeds of a life insurance
policy are paid to the beneficiary(s) in installment payments through a certain
period. After the certain period, payments will continue to be made throughout the
beneficiary's lifetime but the payment may vary from the payments during the certain
- Interest Payments - The death proceeds of a life insurance policy remain
with the insurance company and the company pays the beneficiary interest payments.
- Fixed Installments - The death proceeds of a life insurance policy are paid
to the beneficiary(s) in fixed installments until the proceeds and interest on the
unpaid balance of the proceeds are exhausted.
- Single Premium Annuity - The proceeds of a life insurance policy are used
to purchase a single premium annuity from the insurance company.
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